**Exhibit 10.5**

 

**FORM OF 2003 STOCK OPTION ANDINCENTIVE PLAN NON-STATUTORY STOCK OPTION AGREEMENT**

**(4 YEAR VESTING SCHEDULE)**

 

ACUSPHERE, INC.

Non-Statutory Stock Option Agreement

 

Acusphere,Inc. (the “Company”) hereby grants the following stock option pursuantto its 2003 Stock Option and Incentive Plan. The terms and conditions attachedhereto are also a part hereof.

 
| Name of optionee  (the “Optionee”):                                                     |   |
|---------------------------------------------------------------------------------------------------|--------|
|                                                                                              |   |
| Date of this  option grant:                                                                       |   |
|                                                                                              |   |
| Number of shares of the Company’s Common Stock  subject to this option (“Shares”): |   |
|                                                                                              |   |
| Option exercise  price per share:                                                                 |   |
|                                                                                              |   |
| Shares that are  subject to vesting schedule:                                                     |   |
|                                                                                              |   |
| Vesting Start  Date:                                                                              |   |

 

VestingSchedule:

 
| Vesting Start  Date:                                                                                            | 0%                                           |
|-----------------------------------------------------------------------------------------------------------------|----------------------------------------------|
|                                                                                                            |                                         |
| On or after [ ]  but prior to [ ]:                                                                              | 2.083% per month                             |
|                                                                                                            |                                         |
| On or after [ ]:                                                                                                | 100% *[four years after Vesting Start Date]* |
|                                                                                                            |                                         |
| All vesting is  dependent on the continuation of a Business Relationship with the Company, as  provided herein. |
|                                                                                                            |
| Payment  alternatives:                                                                                          | Section 7(a)  (i) through (iii)         |

 

Thisoption satisfies in full all commitments that the Company has to the Optioneewith respect to the issuance of stock, stock options or other equitysecurities.

 
|                   |   | Acusphere, Inc. |
|------------------------|--------|-----------------|
|                   |   |            |   |
| Signature of  Optionee |   | By:             |   |
|                   |   |            | Name of Officer: |
| Street Address         |   |            | Title: |
|                   |   |            |   |
| City/State/Zip  Code   |   |            |   |

 

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ACUSPHERE, INC.

 

NON-STATUTORY STOCK OPTION AGREEMENT — INCORPORATEDTERMS AND CONDITIONS

 

1.             GrantUnder Plan. This option is granted pursuant to and is governed by theCompany’s 2003 Stock Option and Incentive Plan (the “Plan”) and, unlessthe context otherwise requires, terms used herein shall have the same meaningas in the Plan.

 

2.             Grantas Non-Qualified Stock Option. This option is a non-statutory stock optionand is not intended to qualify as an incentive stock option under Section 422of the Internal Revenue Code of 1986, as amended, and the regulationsthereunder (the “Code”).

 

3.             Vestingof Option.

 

(a)           Vestingif Business Relationship Continues. The Optionee may exercise this optionon or after the date of this option grant for the number of shares of CommonStock, if any, set forth on the cover page hereof. If the Optionee hascontinuously maintained a Business Relationship (as defined below) with theCompany through the dates listed on the vesting schedule set forth on thecover page hereof, the Optionee may exercise this option for the additionalnumber of shares of Common Stock set opposite the applicable vesting date. Notwithstandingthe foregoing, the Board may, in its discretion, accelerate the date that anyinstallment of this option becomes exercisable. The foregoing rights arecumulative and may be exercised only before the date which is ten years fromthe date of this option grant.

 

(b)           Definitions.The following definitions shall apply:

 

“Business Relationship” means service to theCompany or its successor in the capacity of an employee, officer, director orconsultant.

 

“Cause” means: (i) gross negligence or willfulmalfeasance in the performance of the Optionee’s work or a breach of fiduciaryduty or confidentiality obligations to the Company by the Optionee; (ii)failure to follow the proper directions of the Optionee’s direct or indirectsupervisor after written notice of such failure; (iii) the commission by theOptionee of illegal conduct relating to the Company; (iv) disregard by theOptionee of the material rules or material policies of the Company which hasnot been cured within 15 days after notice thereof from the Company; or (v)intentional acts on the part of the Optionee that have generated materialadverse publicity toward or about the Company.

 

4.             Terminationof Business Relationship.

 

(a)           Termination.If the Optionee’s Business Relationship with the Company ceases, voluntarily orinvoluntarily, with or without cause, no further installments of this

 

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optionshall become exercisable, and this option shall expire (may no longer beexercised) after the passage of sixty days from the date of termination, but inno event later than the scheduled expiration date. Any determination under thisagreement as to the status of a Business Relationship or other matters referredto above shall be made in good faith by the Board of Directors of the Company.

 

(b)           EmploymentStatus. For purposes hereof, with respect to employees of the Company,employment shall not be considered as having terminated during any**leave of absence if such leave of absence has been approvedin writing by the Company and if such written approval contractually obligatesthe Company to continue the employment of the Optionee after the approvedperiod of absence; in the event of such an approved leave of absence, vestingof this option shall be suspended (and the period of the leave of absence shallbe added to all vesting dates) unless otherwise provided in the Company’swritten approval of the leave of absence. For purposes hereof, a termination ofemployment followed by another Business Relationship shall be deemed atermination of the Business Relationship with all vesting to cease unless theCompany enters into a written agreement related to such other BusinessRelationship in which it is specifically stated that there is no termination ofthe Business Relationship under this agreement. This option shall not beaffected by any change of employment within or among the Company and itsSubsidiaries so long as the Optionee continuously remains an employee of theCompany or any Subsidiary.

 

(c)           Terminationfor Cause. If the Business Relationship of the Optionee is terminated forCause (as defined above), this option may no longer be exercised from and afterthe Optionee’s receipt of written notice of such termination.

 

5.             Death;Disability.

 

(a)           Death.Upon the death of the Optionee while the Optionee is maintaining a BusinessRelationship with the Company, this option may be exercised, to the extentotherwise exercisable on the date of the Optionee’s death, by the Optionee’sestate, personal representative or beneficiary to whom this option has beentransferred pursuant to Section 10, only at any time within 180 daysafter the date of death, but not later than the scheduled expiration date.

 

(b)           Disability.If the Optionee ceases to maintain a Business Relationship with the Company byreason of his or her disability, this option may be exercised, to the extentotherwise exercisable on the date of cessation of the Business Relationship,only at any time within 180 days after such cessation of the BusinessRelationship, but not later than the scheduled expiration date. For purposeshereof, “disability” means “permanent and total disability” asdefined in Section 22(e)(3) of the Code.

 

6.             PartialExercise. This option may be exercised in part at any time and from time totime within the above limits, except that this option may not be exercised fora fraction of a share.

 

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7.             Paymentof Exercise Price.

 

(a)           PaymentOptions. The exercise price shall be paid by one or any combination of thefollowing forms of payment that are applicable to this option, as indicated onthe cover page hereof:

 

(i)            by checkpayable to the order of the Company; or

 

(ii)           deliveryof an irrevocable and unconditional undertaking, satisfactory in form andsubstance to the Company, by a creditworthy broker to deliver promptly to theCompany sufficient funds to pay the exercise price, or delivery by the Optioneeto the Company of a copy of irrevocable and unconditional instructions,satisfactory in form and substance to the Company, to a creditworthy broker todeliver promptly to the Company cash or a check sufficient to pay the exerciseprice; or

 

(iii)          subjectto Section 7(b) below, if the Common Stock is then traded on a nationalsecurities exchange or on the Nasdaq National Market (or successor tradingsystem), by delivery of shares of Common Stock having a fair market value equalas of the date of exercise to the option price.

 

In the case of (iii) above, fair market value as ofthe date of exercise shall be determined as of the last business day for whichsuch prices or quotes are available prior to the date of exercise and shallmean (i) the last reported sale price (on that date) of the Common Stockon the principal national securities exchange on which the Common Stock istraded, if the Common Stock is then traded on a national securities exchange;or (ii) the last reported sale price (on that date) of the Common Stock onthe Nasdaq National Market (or successor trading system), if the Common Stockis not then traded on a national securities exchange.

 

(b)           Limitationson Payment by Delivery of Common Stock. If Section 7(a)(iii) isapplicable, and if the Optionee delivers Common Stock held by the Optionee (“OldStock”) to the Company in full or partial payment of the exercise price andthe Old Stock so delivered is subject to restrictions or limitations imposed byagreement between the Optionee and the Company, an equivalent number of Sharesshall be subject to all restrictions and limitations applicable to the OldStock to the extent that the Optionee paid for the Shares by delivery of OldStock, in addition to any restrictions or limitations imposed by thisagreement. Notwithstanding the foregoing, the Optionee may not pay any part ofthe exercise price hereof by transferring Common Stock to the Company unlesssuch Common Stock has been owned by the Optionee free of any substantial riskof forfeiture for at least six months.

 

8.             SecuritiesLaws Restrictions on Resale. Until registered under the Securities Act of1933, as amended, or any successor statute (the “Securities Act”), theShares will be illiquid

 

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and will be deemed to be “restrictedsecurities” for purposes of the Securities Act. Accordingly, such shares mustbe sold in compliance with the registration requirements of the Securities Actor an exemption therefrom and may need to be held indefinitely. Unless theShares have been registered under the Securities Act, each certificateevidencing any of the Shares shall bear a restrictive legend specified by theCompany.

 

9.             Methodof Exercising Option. Subject to the terms and conditions of thisagreement, this option may be exercised by written notice to the Company at itsprincipal executive office, or to such transfer agent as the Company shalldesignate. Such notice shall state the election to exercise this option and thenumber of Shares for which it is being exercised and shall be signed by theperson or persons so exercising this option. Such notice shall be accompaniedby payment of the full purchase price of such shares, and the Company shalldeliver a certificate or certificates representing such shares as soon aspracticable after the notice shall be received. Such certificate orcertificates shall be registered in the name of the person or persons soexercising this option (or, if this option shall be exercised by the Optioneeand if the Optionee shall so request in the notice exercising this option,shall be registered in the name of the Optionee and another person jointly,with right of survivorship). In the event this option shall be exercised,pursuant to Section 5 hereof, by any person or persons other than theOptionee, such notice shall be accompanied by appropriate proof of the right ofsuch person or persons to exercise this option.

 

10.           OptionNot Transferable. This option is not transferable or assignable except bywill or by the laws of descent and distribution. During the Optionee’s lifetimeonly the Optionee can exercise this option.

 

11.           NoObligation to Exercise Option. The grant and acceptance of this optionimposes no obligation on the Optionee to exercise it.

 

12.           NoObligation to Continue Business Relationship. Neither the Plan, thisagreement, nor the grant of this option imposes any obligation on the Companyto continue the Optionee in employment or other Business Relationship.

 

13.           Adjustments.Except as is expressly provided in the Plan with respect to certain changes inthe capitalization of the Company, no adjustment shall be made for dividends orsimilar rights for which the record date is prior to such date of exercise.

 

14.           WithholdingTaxes. If the Company in its discretion determines that it is obligated towithhold any tax in connection with the exercise of this option, or inconnection with the transfer of, or the lapse of restrictions on, any CommonStock or other property acquired pursuant to this option, the Optionee herebyagrees that the Company may withhold from the Optionee’s wages or otherremuneration the appropriate amount of tax. At the discretion of the Company,the amount required to be withheld may be withheld in cash from such wages orother remuneration or in kind from the Common Stock or other property otherwisedeliverable to the Optionee on exercise of this option. The Optionee furtheragrees that, if the Company does not withhold an amount from the Optionee’swages or other remuneration sufficient to satisfy the

 

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withholding obligation ofthe Company, the Optionee will make reimbursement on demand, in cash, for theamount underwithheld.

 

15.           Lock-upAgreement. The Optionee agrees that in the event that the Company effectsan underwritten public offering of Common Stock registered under the SecuritiesAct, the Shares may not be sold, offered for sale or otherwise disposed of,directly or indirectly, without the prior written consent of the managingunderwriter(s) of the offering, for such period of time after the execution ofan underwriting agreement in connection with such offering that all of theCompany’s then directors and executive officers agree to be similarly bound. Anysuch sale or disposition shall be made in accordance with the Company’s insidertrading policy, as amended and in effect from time to time.

 

16.           Arbitration.Any dispute, controversy, or claim arising out of, in connection with, orrelating to the performance of this agreement or its termination shall besettled by arbitration in the Commonwealth of Massachusetts, pursuant to therules then obtaining of the American Arbitration Association. Any award shallbe final, binding and conclusive upon the parties and a judgment renderedthereon may be entered in any court having jurisdiction thereof.

 

17.           Provisionof Documentation to Optionee. By signing this agreement the Optioneeacknowledges receipt of a copy of this agreement and a copy of the Plan.

 

18.           Miscellaneous.

 

(a)           Notices.All notices hereunder shall be in writing and shall be deemed given when sentby mail, if to the Optionee, to the address set forth below or at the addressshown on the records of the Company, and if to the Company, to the Company’sprincipal executive offices, attention of the Corporate Secretary.

 

(b)           EntireAgreement; Modification. This agreement constitutes the entire agreementbetween the parties relative to the subject matter hereof, and supersedes allproposals, written or oral, and all other communications between the partiesrelating to the subject matter of this agreement. This agreement may bemodified, amended or rescinded only by a written agreement executed by bothparties.

 

(c)           FractionalShares. If this option becomes exercisable for a fraction of a sharebecause of the adjustment provisions contained in the Plan, such fraction shallbe rounded down.

 

(d)           Issuancesof Securities; Changes in Capital Structure. Except as expressly providedherein or in the Plan, no issuance by the Company of shares of stock of anyclass, or securities convertible into shares of stock of any class, shallaffect, and no adjustment by reason thereof shall be made with respect to, thenumber or price of shares subject to this option. No adjustments need be madefor dividends paid in cash or in property other than securities of the Company.If there shall be any change in the Common Stock of the Company through merger,consolidation, reorganization,

 

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recapitalization,stock dividend, stock split, combination or exchange of shares, spin-off,split-up or other similar change in capitalization or event, the restrictionscontained in this agreement shall apply with equal force to additional and/orsubstitute securities, if any, received by the Optionee in exchange for, or byvirtue of his or her ownership of, Shares, except as otherwise determined bythe Board.

 

(e)           Severability.The invalidity, illegality or unenforceability of any provision of thisagreement shall in no way affect the validity, legality or enforceability ofany other provision.

 

(f)            Successorsand Assigns. This agreement shall be binding upon and inure to the benefitof the parties hereto and their respective successors and assigns, subject tothe limitations set forth in Section 10 hereof.

 

(g)           GoverningLaw. This agreement shall be governed by and interpreted in accordance withthe laws of the State of Delaware without giving effect to the principles ofthe conflicts of laws thereof.

 

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